Freddie Mac posts $12.1B income in 2021

Freddie Mac reported a net income of $12.1 billion for 2021, a 65% increase from 2020.

The government-sponsored enterprise saw a 20% growth in its single-family mortgage portfolio from 2020 to 2021, driven by soaring home prices and an increase in the average size of loans it acquired. Freddie Mac’s net worth is now $28 billion, more than three times what it was pre-pandemic.

It reported $2.7 billion in net income in the fourth quarter, a 6% decrease year-over-year, which the GSE attributed to an increase in credit-related expenses.

Overall, Freddie Mac purchased $1.22 trillion in single-family loans in 2021, about two-thirds of which were refinances. Freddie Mac also reported that its serious delinquency rate, which has been consistently lower than the rest of the market, is now 1.12%. That figure includes loans in forbearance, if they are past-due based on the loan’s original terms.

The average credit score for loans Freddie Mac purchased also fell slightly, from 759 in 2020 to 753 in 2021.

The Federal Housing Finance Agency has prioritized expanding access to credit while prioritizing safety and soundness. Part of that effort has centered on including rental payments in underwriting at both of its regulated entities.

Freddie Mac CEO Michael DeVito gave an update on progress for Freddie Mac’s on-time rental payment initiative.

In November, Freddie Mac announced it would encourage landlords to provide access to rental payment data, by recouping a portion of closing costs for properties it finances. In exchange, the landlord would use a platform to report on-time rent payments to the credit bureaus.

By year end, he said, 73,000 tenant households across 284 properties had been offered the program, DeVito said. As a result of the program, 10,000 people established credit scores, and improved their scores by an average of 43 points.

During the balance of 2022, DeVito said, Freddie Mac would “continue to emphasize strategic priorities and a renewed focus on mission.”

How it fulfills that mission will be determined, in part, by changes to its Duty to Serve plan for 2022 to 2024, which the Federal Housing Finance Agency asked Freddie Mac and Fannie Mae to revise. In its filings, Freddie Mac did not provide any timeframe for when it would have a new plan, or any details on the revisions its conservator requested.

Freddie Mac also announced the election of two new members to its 13-member Board of Directors, on February 7. Kevin Chavers and Luke Hayden will assume their roles effective February 15.

Chavers, who will serve on Freddie’s audit committee and nominating and governance committee, retired as managing director, global fixed income investment team, at BlackRock in 2021. Previously, Chavers held positions at Morgan Stanley and Goldman Sachs & Company. Prior to that, from 1995 to 1998, Chavers was the president of Ginnie Mae.

Hayden, who will serve on the GSE’s committees for operations and technology, as well as the committee on risk, started his career as a loan officer and loan purchaser. He was most recently CEO of Hayden Consulting, which advises mortgage banks, commercial banks, thrifts, REITs, and private equity firms. He was also vice chairman of Residential Mortgage Services Holdings from 2013 to 2021.

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